Internet Trends and Development
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From: OECD Internet Economy Outlook 2012 Access the complete publication at: http://dx.doi.org/10.1787/9789264086463-en Internet trends and development Please cite this chapter as: OECD (2012), “Internet trends and development”, in OECD Internet Economy Outlook 2012, OECD Publishing. http://dx.doi.org/10.1787/9789264086463-5-en This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in theWest Bank under the terms of international law. OECD Internet Economy Outlook © OECD 2012 Chapter 2 Internet trends and development This chapter provides a forward-looking perspective on recent trends in ICT technologies, applications and services, and offers predictions for development over the next few years, highlighting particular trends that could have a substantial impact on future policy. It examines these trends in terms of networks, devices and services. It concludes with an analysis of Internet developments in various sectors of the economy. The chapter also highlights three key overarching trends: the growth of broadband, the importance of mobility, and the shift to cloud computing. 63 2. INTERNET TRENDS AND DEVELOPMENT Emerging technologies The pace of technological change on the Internet and in the ICT sector in general is extremely rapid, compared to other sectors of the economy. In just a period of two years or less, the entire sector can shift as a result of new technologies, applications and services. New companies can rapidly gain market share while former market leaders quickly falter. Markets move so quickly that policy makers and other market participants constantly need to keep an eye on developments and evolving market trends as a way to respond quickly to new policy challenges. This chapter focuses on some of the most promising and important Internet trends that are emerging and will continue to evolve over the next two years, providing an early glimpse of potential policy implications. The chapter begins by examining emerging technologies related to networks, devices and services. It continues with broader trends of how the Internet is transforming different sectors across the economy. Networks Networks are the underlying physical infrastructure of the Internet, which support evolving applications and services. High-speed networks are increasingly viewed as fundamental for economic and social development. They serve as a communication and transaction platform for the entire economy and can be used to improve productivity across all sectors. Broadband has thus become a key focus of government policy makers. Many governments seeking to increase private sector investment in high-speed broadband networks have reviewed existing legal and regulatory frameworks so as to ensure the levels of investment necessary to achieve policy goals. Most governments have set targets as part of their plans, such as requiring certain levels of geographic coverage and minimum or average transmission speeds (e.g. 100 Mbps). Short-term targets include detailed explanations of the necessary requirements for their achievement, while longer-term targets are less specific to allow further refinement and development (OECD, 2011d). Two key trends are emerging that will shape the near future of connectivity: very-high-speed fibre connections are being deployed closer to population areas and new high-speed wireless connections are spreading connectivity to an increasingly mobile population. The upgrading of broadband subscriptions to fibre, so as to support much higher speeds, has begun in OECD countries (Figure 2.1). However, a recent assessment suggests that, with some notable exceptions, fibre-to-the-home/broadband (FTTH/B) deployment remains tentative or at an early stage. The exceptions are Korea and Japan, both of which have prioritised fibre deployment. Estonia, Japan, Korea, the Slovak Republic and Sweden lead the OECD in number of fibre subscriptions as a percentage of total wired broadband subscriptions (over 25%). Meanwhile, the Global FTTH Council reports that no more than 26 economies worldwide have at least 1% of their households connected to FTTH or fibre-to-the-building (FTTB), and of these only eight are G20 members (Global FTTH Council, 2011). 64 OECD INTERNET ECONOMY OUTLOOK © OECD 2012 2. INTERNET TRENDS AND DEVELOPMENT Figure 2.1. Fibre broadband penetration, December 2011 Percentage of fibre connections in total broadband subscriptions Japan Korea Slovak Republic Sweden Estonia Norway Slovenia Iceland Denmark OECD Czech Republic Hungary Portugal United States Netherlands Turkey Switzerland Poland Italy United Kingdom Finland Spain Canada France Luxembourg Australia Germany Ireland Austria New Zealand Greece Belgium 0 10203040506070 % Note: Includes fibre-to-the-home (FTTH) and fibre-to-the-building (FTTB or apartment LAN) connections. Some countries may have fibre, but have not reported figures so they are not included in the chart. See the OECD broadband portal for information on data sources and notes. Source: OECD Broadband Portal, July 2012. 1 2 http://dx.doi.org/10.1787/888932692942 Fibre-based broadband connections offer the fastest data transfers, but it is the mobile segment of the Internet access market that has seen the most impressive growth over the last two years. Wireless broadband has quickly become the dominant broadband access channel in OECD countries. In December 2011, there were 315 million wired and 667 million wireless broadband subscriptions throughout the OECD. Standard mobile subscriptions with wireless broadband access outnumbered DSL subscriptions by two-to-one across the OECD. Finland, Japan, Korea and Sweden lead the OECD in terms of wireless broadband subscriptions per 100 inhabitants (Figure 2.2). High-speed networks have become increasingly important for new services and applications. Indeed, the fusion of cloud computing, mobile devices and broadband are changing the way companies deal with computing resources and the way people perceive and use computer technology. Tablet PCs and smartphones are making computers ubiquitous, while cloud services and mobile Internet enable “everything/everywhere” data access. The demand for high-speed bandwidth continues to climb and the breakdown of traffic is evolving. Traditional media broadcasting is transitioning to on-demand programmes, such as Internet TV and mobile audio and video streaming. According to Cisco, in 2010 global Internet video traffic surpassed global peer-to-peer (P2P) traffic, which has dominated networks over the past ten years. Cisco’s Visual Networking Index (Cisco, OECD INTERNET ECONOMY OUTLOOK © OECD 2012 65 2. INTERNET TRENDS AND DEVELOPMENT Figure 2.2. OECD wireless broadband subscriptions per 100 inhabitants, December 2011 By technology Satellite Terrestrial fixed wireless Standard mobile broadband subscriptions Dedicated mobile data subscriptions 100 90 80 70 60 50 40 30 20 10 0 Italy Korea Japan Spain Israel Chile Finland Norway IrelandIceland Poland EstoniaFranceAustriaGreeceCanada TurkeyMexico Sweden Denmark Australia Portugal Germany SloveniaBelgium Hungary SwitzerlandNetherlands United StatesNew ZealandLuxembourg United Kingdom Czech Republic Slovak Republic Note: Standard mobile broadband subscriptions may include dedicated mobile data subscriptions when breakdowns are not available. See the OECD broadband portal for information on specific country notes. Information on data for Israel: http://dx.doi.org/10.1787/888932315602. Source: OECD Broadband Portal, July 2012. 1 2 http://dx.doi.org/10.1787/888932692961 2011) also predicts that by 2012 Internet video will account for over 50% of consumer Internet traffic. In 2010, video traffic accounted for 40% of total traffic and Cisco predicts that this will rise to 50% by the end of 2012 and 62% by 2015. Wireless networks are also seeing large growth in traffic volumes. The use of unlimited data tariff plans, popular with many users, has stimulated traffic growth and raised questions over pricing structures on some mobile networks. In the United States, AT&T (and its affiliates), which had an exclusive handset arrangement with Apple for the iPhone, announced that it would move to tiered pricing for new customers, and would no longer offer a plan for unlimited data use. In response, some competitors stepped up their advertising for unlimited plans with rival smartphones. They also offered customers various choices to tether smartphones and portable devices, such as tablet computers, to their mobile handsets, with unlimited tariff plans. Unlimited data plans undoubtedly encourage increased data usage and most likely the development of applications for smartphones. At the same time, increased use may challenge network capacity, requiring higher investment by operators to avoid network congestion. The extent to which data caps will curtail usage and network enhancements will match increasing data usage remains to be seen. Next-generation mobile networks are currently being upgraded to support these new data demands. In the first quarter of 2011, the 3rd Generation Partnership Project (3GPP) announced the first implemented technology to meet the requirements of full-featured